Wealth Is the Driver as Golf Soars in Popularity in China

From Bloomberg News

From Heilongjiang province, bordering Russia in the northeast, to Yunnan province, next to Vietnam in the southwest, developers are poised to double the number of golf courses in China to 400 next year.

"This is just the start," said David Chu, developer, owner and chairman of Mission Hills Golf Club in Guangdong, who commissioned Annika Sorenstam, the world's No. 1-ranked woman golfer, to design her first course on his land near Hong Kong. "Golf has more growth potential in China than in any other part of the world."

That's partly because China's economy is growing at an annual rate of 8.5% and a rising percentage of China's 1.3 billion people have become smitten with the centuries-old game.

Today, golf is China's "green opium," said Ye Hong, owner of the Beautiful Pines club in Beijing. Developers spent $4 billion during the last 20 years to make China the fifth-biggest golf-playing nation behind the U.S., Japan, Canada and Britain, said Ramlan Haron, executive director of the Malaysia-based Asian Professional Golfers Assn.

"Everywhere I turn" in China, he said, "they are just building golf courses."

But China's golf industry has a long way to go to catch up with other countries. Last year there were 16,095 golf courses in the U.S., 2,579 in Britain and 2,317 in Japan, according to the Golf Research Group, a consulting firm with offices in Dallas and London.

Nike Inc. and Adidas-Salomon, the world's top two sporting-goods makers, are targeting the country's domestic market even as they manufacture clubs in China for export. China is the leading exporter of golf equipment, accounting for $858 million of the $2-billion market last year, Golf Research says.

"Five or 10 years from now, this region will equal North America from a business perspective," Guillermo Salinas, the director of international business for Nike Golf, said in an e-mail.

Chu, a 53-year-old Hong Kong-born businessman, said he had spent $120 million to buy 7.7 square miles of land for Mission Hills and $267 million to develop it. By next year, he plans to make the club, which opened in 1993, the world's biggest, with 180 holes on 10 celebrity-designed courses. The current leader is 107-year-old Pinehurst in North Carolina, which has eight courses.

The Mission Hills complexes, dotted with luxury housing, lie between Shenzhen, the industrial boomtown that borders Hong Kong, and its similarly robust neighbor in Guangdong province, Dongguan. About 100 million people, including 7 million in Hong Kong, live within a two-hour drive of Mission Hills, said Chu.

Golf is clearly being targeted at the nation's wealthy -- and at rich visitors.

Annual membership fees range from $45,000 to $141,000. There is a cap of 1,500 members for each private course.

About 70% of China's courses are in high-income areas such as Beijing, Shanghai, Guangdong and Fujian, the province closest to Taiwan, the China Golf Assn. says. China has 210,000 millionaires in U.S. dollar terms, according to Cap Gemini Ernst & Young.

Tourist destinations like the island province of Hainan and Xian city, gateway to the terra cotta warriors, are also golf growth areas.

Most developers are from Hong Kong and Taiwan, who often work in partnership with provincial governments, said the Asian PGA's Ramlan. "I haven't heard of any courses owned by Americans or Europeans," he said.

Once viewed as decadent in communist China, golf began to be seen as a means of attracting foreign investment after former President Deng Xiaoping opened up the country's economy in 1979.

A Hong Kong businessman built the first communist-era course, designed by Arnold Palmer, in 1984 in Guangdong. Soon, Asian businessmen added clubs to amuse their China-based workers. Tourists followed, and more courses.

Yet as late as 2001, the Financial Times reported that some company officials were urging executives not to play because the game was considered elitist.

Such pleas have gone largely unheeded. At the Beautiful Pines club and driving range in Beijing, local Chinese account for 80% of customers, up from 20% when it opened three years ago. Even at Chu's exclusive Mission Hills, locals make up 30% of members. Hong Kong residents, for whom Chu runs a shuttle service, dominate the membership list.

"Most of the players at our club are successful people," Ye said. "Their purpose is both business and social. It's also a social status thing."

Zhang Wei, manager of a building materials factory in Shenzhen and a Mission Hills member, said a business associate had introduced him to golf three years ago. "I get a lot of business done on the golf course," said Zhang, 43, who had just finished a midweek game. "After all, doing business in China is all about trust and relationships."

International success has helped the game prosper. Mission Hills hosted golf's World Cup in 1995. This year, a Chinese team qualified for the World Cup, but a scheduling conflict forced it to withdraw.

Two years ago, Chu brought the game's current icon, Tiger Woods, to China for the first time. Woods held a clinic for leading Chinese professionals, including Zhang Lianwei.

Today, Zhang, 38, a self-taught golfer, plays mostly on the Japan Golf Tour. He ended 22nd on the earnings list last year with $375,000. In January, he won the Singapore Masters, a European Tour event. On Sunday, he won the Asian PGA's China Open in Shanghai.

Outside China, golf is stagnating. In the U.S., the number of players has shrunk by 1 million to 26 million in a decade, Golf Research says. In Japan, where 14 million people play, participation fell to a 13-year low this year, a survey by Nikkei English News found.

As a result, some of golf's biggest names are heading to China. Jack Nicklaus, Nick Faldo and Greg Norman have designed courses there.

David Leadbetter, voted Golf Digest's best teacher in America, has opened a golf academy in Guangdong.

Scotland's Royal and Ancient Golf Club of St. Andrews, which regulates the sport in 127 countries, has started a greenskeeper training program.

Arnold Palmer, designing a course in Beijing, said China reminded him of Japan, where he has built 19 courses. "When the Japanese people turned to golf, they really jumped in," Palmer said. "I wouldn't be surprised if China follows that same trend."

Robert Trent Jones II, one of the world's top two architects, has mapped six Chinese courses. He charges $950,000 per course. "Golf is very agricultural in nature and China is very agricultural," Jones said. "All the elements are there for steady growth."